DOES INVESTOR PROTECTION PREVENT EARNINGS MANAGEMENT ACTIVITY THROUGH REAL ACTIVITY MANIPULATION? ASIAN COMPARISON

DOES INVESTOR PROTECTION PREVENT EARNINGS MANAGEMENT ACTIVITY THROUGH  REAL ACTIVITY MANIPULATION?

ASIAN COMPARISON

Abstract

This paper examines systematic differences in earnings management through real activity manipulation across 6 Asia countries. Contrary with Leuz (2003) finding that earnings management through accrual manipulation is lower in economies with high investor protection than in low investor protection. We predict that  in economies with high investor protection, manager prefer to manage earnings through real activity manipulation rather than through accrual manipulation. Because accrual manipulation is more likely to draw auditor or regulator scrutiny than real decisions about pricing and production. Our findings are consistent with our prediction.

          Keyword: earnings management, real activity manipulation, investor protection

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EARNINGS AND CASH FLOW PERFORMANCES SURROUNDING IPO

EARNINGS AND CASH FLOW PERFORMANCES SURROUNDING IPO

Abstract

Initial public offerings (IPOs) offer a fruitful area to be explored given the existence of asymmetric information among various parties interested in the IPO. This study attempts to examine whether there is significant increase in earnings level prior to the offering to be interpreted as the existence of earnings management. The behaviour of cash flow from operation is also examined.

A sample of 35 Indonesian IPOs that made public during 2002-2005 periods was examined. The t-test for mean difference was performed to test whether earnings differences persist. The findings show that earnings level tends increase in the year closes to the IPO date, but decrease in the next two year after that. The behaviour of cash flow from operating activities is almost similar. However, this study is unable to state that earnings management is strongly evidenced in Indonesian IPO setting.

 Keywords: IPOs, prospectus, earnings and cash flow performance

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DETERMINANTS OF STOCK MARKET REACTION TOWARD LEGAL REQUIREMENT OF CSR IN INDONESIA

DETERMINANTS OF STOCK MARKET REACTION TOWARD LEGAL REQUIREMENT OF CSR IN INDONESIA

*Gatot Soepriyanto

Accounting Department Bina Nusantara (BINUS) University

Email: gsoepriyanto@binus.edu

**Rudy Suryanto

Accounting Department - Muhammadiyah University Yogyakarta (UMY)

Email:rudysuryanto@yahoo.com

Abstract

Prior study on stock market reaction toward mandatory Corporate Social Responsibility (CSR) implementation law in Indonesia (article 74, Law No. 40/2007 on Limited Liability Company) present evidence that the equity investors from firms whose deal with or related to the management of natural resources, reacted positively to the passage of the law. This suggests that investors view mandatory CSR implementation law as “a good news” which in the long run may increase firm values. This study, therefore, aims to investigate the economic determinants that drive positive market reactions, as we found that the magnitude of the reactions were vary among companies taken as sample. We address five hypotheses that investor reaction is explained by: (a) size of firms, (b) profitability of firms, (c) leverage of firms, (d) how long the firm has been established and (e) whether the firms in are engaged in mining or non-mining industry. These hypotheses are investigated through cross-sectional regression analysis on firms that directly affected by the CSR law. We conclude that the stock market reaction toward the law is determined by size, leverage, age of firms and whether firms are engaged in mining industry or not. It also concludes that investors react more (less) positive to small (big) firms and high (low) leverage firms, suggesting that the investor consider the law as “insurance” for company to sustain their operation.

Keywords: CSR Mandatory Law, Stock Market Reaction, Economic Determinants

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Accounting in the Golden Age of Singosari Kingdom: A Foucauldian Perspective

Accounting in the Golden Age of Singosari Kingdom:

A Foucauldian Perspective

Eko Ganis Sukoharsono

and

Novrida Qudsi

Department of Accounting

Brawijaya University

Abstract

The aim of this study is to explore the history of accounting in Indonesia. In this case, a particular period of Indonesia history – the form and the existence of the accounting system in the Singosari Kingdom era – is the focus of the investigation. In the context of this study, accounting is not simply a method of calculation, but it is a discipline with complex phenomena in which it influences the individual, organizational, and social orders. In addition, the range of its aspects is from social, political and economic point of view.  

            This study is conducted by using a Foucauldian concept of the relation between the power and knowledge. The historical accounting researchers use the Foucauldian approach to show the accounting complexity of the power and knowledge structures within a society. This approach shows the accounting system as a valuable social science for disciplining the society and manifesting a comprehensive political power within the society. Then the major concern of the methodological analyses in the accounting research is to disclose how accounting becomes a disciplinary power and constitutive activity of knowledge.

            The kingdom of Singosari (1222-1292) was historically closely related to the foundation of Majapahit kingdom, particularly in the field of public finance and administrative accountability. There was a fact that during Singosari and Majapahit kingdom, state-craft stressed the importance of a full treasury for successful governmental activities. Both kingdoms evolved a regular system of taxation. The taxation system, in some extent, was a complex system in which it provided the tax for merchandise in various tariffs and different types of levies based on the commodities and the problems occurred. The complex system of the taxation would not be possible without involving the accounting in term of calculability. One of the particular developments of the accounting system in form of writing during the Singosari kingdom was related to the mechanism in which writing was used for the purpose of administration and accountability of the tax collection in the royal court of the Singosari kingdom. The records of tax collection were reflected in simple forms. For instance, the Inscription of Turyyan mentions that the earning of the society in a year was equal to 1 kati and 3 gold swarna.

            Then it can be concluded that the development of accounting in Indonesia is not an instant process, but it emerged through a long and complex process of the history. The kingdom of Singosari used accounting as a technique to discipline the subjects under the kingdom’s territory. Through this study, it is clear that accounting had a significant role as a supporting means of the Singosari kingdom development. It did not merely provide the technical calculation, but also the diverse roles in social, economic, and political life.

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Analysis of Selling, General and Administrative Cost Stickiness Empirical Study of Manufacturing Company Listed in the Jakarta Stock Exchange

Analysis of Selling, General and Administrative Cost Stickiness

Empirical Study of Manufacturing Company

Listed in the Jakarta Stock Exchange

Astri Novianti & Primanita Setyono

ABSTRACT

A traditional theory of cost behavior is that cost responses mechanically to activity volume. Mechanical means that cost adjust without management intervention. The purpose of this research is to investigate whether cost is “sticky” in different economic condition. The cost is sticky if whether cost increases more when volume rises than they decrease when volume is fallen by an equivalent amount. 69 manufacturing firms listed in the Jakarta Stock Exchange from 1993 to 2004 (divided into three period) were taken as sample using purposive sampling method. The statistical method used to test hypotheses is panel data log linear regression. The result of this study shows that: 1) cost stickiness is not found before and after economic crisis period, but it is found in during economic crisis period. 2)The degree of stickiness increases with employee intensity in each period with the highest stickiness before economic crisis. 3)The degree of stickiness increases with asset intensity before economic crisis period. While, during and after economic crisis, the degree of stickiness decrease with the increase asset intensity.

Keywords: Cost Behavior, Economic Crisis, Selling, General and Administrative Cost, Employee Intensity, Asset Intensity

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The Effect of Cognitive Style and Sponsorship Bias on the Treatment of Opportunity Costs in Resources Allocation Decisions

The Effect of Cognitive Style and Sponsorship Bias on the

Treatment of Opportunity Costs in Resources Allocation Decisions

H. Alfian

(Fakultas Ekonomi Universitas Lambung Mangkurat, Banjarmasin)

Abstract

The current research seeks to identify factors that may potentially influence the way managers respond to opportunity costs when relevant data are not explicitly provided. Identification of such factors should enhance our understanding of why some managers respond to opportunity costs in ways that may be inconsistent with normative economic theory. This information could then be used to identify those situations in which structural and procedural precautions are necessary to correct limitations and biases in human information processing and so ensure the correct treatment of opportunity costs.

Disability of individual processes of perception dimension of Jungs’ typology on research of Chenhall & Morris (1991) to explain difference of managers’ way to making decision, lead us to research questions are: first, which cognitive style combination have a proclivity to incorporate implicit opportunity costs in their economic analysis? Second, used of two dimensions of cognitive style, will project sponsorship encourage managers to ignore negative economic signals derived from opportunity costs that are nevertheless relevant to the resource allocation decision?

            A laboratory experiment with 2x4 factorial designs was used to investigating the effect of cognitive style on the managers’ decision of opportunity costs in situation of absence sponsorship or not. The results indicated that intuitive managers tended to incorporate opportunity costs in their decisions whereas sensation individuals appeared to focus more on the directness of the relationship between expenditure and a project to determine the relevance of the cost. Opportunity cost implications tended not to be identified by the sensation group. Evidence was found that sponsorship moderated the influence of cognitive style on decision to include opportunity costs.

Keywords: Cognitive style, sponsorship bias, and opportunity cost

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WHAT DETERMINES INTERNAL CONTROL WEAKNESS? AN EMPIRICAL ANALYSIS OF STATE-OWNED ENTERPRISES AUDITED BY STATE AUDIT AGENCY

WHAT DETERMINES INTERNAL CONTROL WEAKNESS?

AN EMPIRICAL ANALYSIS OF STATE-OWNED ENTERPRISES

AUDITED BY STATE AUDIT AGENCY [1]

Abstract

A material weakness in internal control is defined as a significant deficiency, or combination of significant deficiencies, that result in more than a remote likelihood that a material misstatement of the annual or interim financial statement will not be prevented or detected. Section 404 of the Sarbanes-Oxley Act (Management Assessment of Internal Controls) stipulates that management of publicly listed firms has to evaluate the effectiveness of their internal controls over financial reporting and disclose the identified material weakness. Numerous articles aim to find empirical evidence of factors influencing weakness of internal control.

In Indonesia, publicly listed firms are yet obliged to disclose their material weakness of internal control. However, BPK (as the state audit agency) report the material weakness of internal control over entities’ financial reporting in their audit report of state-owned enterprises (SOE or BUMN). The report enables us to empirically analyze influencing factors of internal control weakness over BUMN  financial reporting.

There are four independent variables to be hypothesized to influence internal control weakness (WEAK): profitability (PROFIT), firm size (SIZE), growth rate (GROWTH), and the presence of complex transaction (COMPTRANS). Additionally, we also employ one control variable (FORM or legal form of SOE: Persero or non-Persero).

Empirical results show that without control variables, only SIZE is significantly associated with WEAK (for univariate and multivariate analysis). However, the direction of effect of SIZE on WEAK (positive) is contradictory with the hypothesized direction (negative). After including control variables, the power of regression equation is slightly increasing. However, still only SIZE significantly affect WEAK with contradictory direction.  

Keywords        : Internal control, Internals control weakness, state-owned enterprises (SOE)

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[1] This article is a joint-research program among the authors focusing on internal control weakness issue (in different research setting). Research issue was first initiated by the first author. The second and third authors also conduct similar research (using different context and/or variables) for completing their undergraduate thesis.

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IMPLEMENTATION OF REFINED HYPERVIEW OF LEARNING (rHOL) ON MANAGEMENT ACCOUNTING LEARNING PROCESS (AN ETHNOGRAPHIC STUDY)

IMPLEMENTATION OF REFINED HYPERVIEW OF LEARNING (rHOL) ON MANAGEMENT ACCOUNTING LEARNING PROCESS

(AN ETHNOGRAPHIC STUDY)

Ari Kamayanti

Aji Dedi Mulawarman

Abstract

The purpose of this paper is to describe the implementation of Love Based Accounting Education (LBAE) through refined Hyperview of Learning (rHOL) as the core of humanity learning process. The essence of rHOL is purification process. The result described its impacts on learning process to suit faith towards God to free accounting education from secularism and corporate hegemony. The implications on accounting students’ learning conceptions on three management accounting topics: ABC, TQM and BSC, that are definitely secular and support corporate hegemony, were portrayed by extending ethnography by phenomenology. This method is named exetnography. The presence of secularism and corporate hegemony cause the disregard for local values and local needs respectively. The role of educator has become an important factor in implementing rHOL since he/she must trigger and maintain the purification process throughout the learning process. The results were astonishing since there were shifts of students’ consciousness in three varying degrees (verstehen, critical, reconstruction/deconstruction). Both educator and students were enlightened since renewed consciousness to return to local values and local needs emerged as a result of rHOL implementation.

Keywords: LBAE, rHOL, Purification, ABC, TQM, BSC, Ethnography, Phenomenology, Exethnography

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UJI EMPIRIS MODEL KESUKSESAN SISTEM INFORMASI KEUANGAN DAERAH (SIKD) DALAM RANGKA PENINGKATAN TRANSPARASI DAN AKUNTABILITAS KEUANGAN DAERAH

UJI EMPIRIS MODEL KESUKSESAN SISTEM INFORMASI KEUANGAN DAERAH (SIKD) DALAM RANGKA PENINGKATAN TRANSPARASI DAN AKUNTABILITAS KEUANGAN DAERAH

Imam Mulyono

Politeknik Negeri Malang

imam_mulyono76@yahoo.com

ABSTRACT

The DeLone and McLean model of information system success has much adopted by information researchers to test information success model. This study is purposed to adopt DeLone and McLean model to test the relationship of antecedents (system quality, information quality), and the consequences (individual impact and organizational impact) of the information success (user satisfaction, intended to use). There were 130 respondent participated (treasurer of SKPD and SKPKD in Malang and Batu Cities at East Java Province in this study. Data were collected by surveys and analyzed by Structural Equation Model. The results show that of the nine hypothesized relationships tested, all hypothesized were found to be significant.

Key words: information success, individual impact, organizational impact, system quality, information quality. user satisfaction and intended to use

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STUDI TENTANG HUBUNGAN SISTEM PENGUKURAN KINERJA STRATEGI INTEGRATIVE, PENYELARASAN STRATEGI MANUFAKTUR, PEMBELAJARAN ORGANISASIONAL DAN HASIL AKHIR STRATEGI (Penelitian Empiris pada Manajer Perusahaan Industri Manufaktur di Banten)

STUDI TENTANG HUBUNGAN SISTEM PENGUKURAN KINERJA STRATEGI INTEGRATIVE, PENYELARASAN STRATEGI MANUFAKTUR, PEMBELAJARAN ORGANISASIONAL DAN HASIL AKHIR STRATEGI

(Penelitian Empiris pada Manajer Perusahaan Industri Manufaktur di Banten)

Lili Sugeng Wiyantoro

Ayu Noorida Soerono

Munawar Muchlis

Tubagus Ismail

(Universitas Sultan Ageng Tirtayasa)

ABSTRACT

This research aims to test empirically the relationship integrative strategic performance measurement systems (SPMS), strategic alignment of manufacturing, organizational learning, and strategic outcomes. Data were collected from 560 managers of manufacturing companies in Banten with random sampling. The hypothesis was analyzed using Structural Equation Model (SEM) with the Program SmartPLS (Partial Least Square). The result indicate that there is a positive relationship between integrative SPMS and competitive outcomes associated with both product differentiation and low cost-prices strategies, there is a negative relationship between the strategic alignment of manufacturing and competitive outcomes associated with both product differentiation and low costprice strategies, there is a positive relationship between integrative SPMS and strategic alignment of manufacturing, there is a positive relationship between organizational learning and competitive outcomes associated with product differentiation but organizational learning have a negative relationship with low cost-prices strategies have a negative relationship, and there is a positive relationship between integrative SPMS and organizational learning.

Key words: Integrative Strategic Performance Measurement Systems, Strategic Alignment of Manufacturing, Organizational Learning, Strategic Outcomes, Balance Scorecard

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STUDI KEBUTUHAN INFORMASI PENGGUNA LAPORAN KEUANGAN PEMERINTAH

STUDI KEBUTUHAN INFORMASI PENGGUNA LAPORAN KEUANGAN PEMERINTAH

Rr. Sri Pancawati Martiningsih

Jurusan Akuntansi Fakultas Ekonomi Universitas Mataram

ABSTRACT

The aim of this research is to identify the user information needs of the governmental financial reports and the suitability between the rules of the governmental financial reports and user needs of the governmental financial reports. Respondents in this research are the society as one of the main user groups of the governmental financial reports. The respondents are 457 people from 10 provinces in Indonesia.

Data are collected by a survey method. Questionnaires are distributed by both directly and mail. The statistic method used in testing the hypothesis is one sample t-test. Comparison between the rules of the governmental financial reports and the user

information needs of the governmental financial reports is done by using content analysis. An additional analysis is conducted in order to know the influences of respondents’ characteristics towards the user information needs of the governmental financial reports by using Multivariate Analysis of Variance (MANOVA).

The result indicates that the financial information, the compliance to the rules, performance, planning and budgeting, and narrative information are strongly needed in the governmental financial reports. The information about the economic condition is less needed in the governmental financial reports. Having been compared with the rules of the governmental financial reporting in The Government Regulation No. 24, 2005 (Government’s Standard of Accounting) and The Regulation of the Minister of Domestic

Affairs No. 13, 2006, the rules of the governmental financial reporting did not completely

accordance with the user needs. Meanwhile, the MANOVA result indicates that the characteristics of respondents, i. e. the education level (senior high school, diploma, undergraduate and graduate) and the education background (accounting and nonaccounting) significantly influence the user information needs of the governmental financial reports.

Key words: user information needs of the governmental financial reports, financial information, the compliance to the rules, performance, planning and budgeting, and narrative information

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